when to take profit?

D

dafishman

Been away for a long time from ET. Getting back into trading. My biggest problem has been when to take profit. Seems like I exit to early some days and others, out too late and profits got eaten up.

Anyone have some good advice or point me in the right direction? I know there is no holy grail for exiting. Sometimes you will leave money on the table, other times it works out.
 
I look to take profit at the next key price level in line to be defended. If price slices right through that level, I'll hold for more, but if price stalls there, I take my base profit there. I only put on a trade when that particular key level is far enough from the entry price to potentially offer an acceptable profit with respect to the necessary risk (logical stop loss placement).
 
dafishman said:
Been away for a long time from ET. Getting back into trading. My biggest problem has been when to take profit. Seems like I exit to early some days and others, out too late and profits got eaten up.

Anyone have some good advice or point me in the right direction? I know there is no holy grail for exiting. Sometimes you will leave money on the table, other times it works out.
More...

I take profits when my systems tells me to do so :D
Seriously, statistics is great help here. If you will use quantitative approach, then you will have no question like this.
 
dafishman said:
Been away for a long time from ET. Getting back into trading. My biggest problem has been when to take profit. Seems like I exit to early some days and others, out too late and profits got eaten up.

Anyone have some good advice or point me in the right direction? I know there is no holy grail for exiting. Sometimes you will leave money on the table, other times it works out.
More...

Do you have an exit strategy or profit taking strategy ?

If so, what is it ?

I ask because "most traders" that have exit problems is mainly due to discipline problems. For example, lets say your exit strategy called XYZ tells you to take profit when the price action reaches a certain price or certain key price area that's about +3 points away.

You exit early @ +2.1 because the prior trade was a losing trade and you just wanted to bank some profit. After taking your +2.1 it then continues without you to +3 points. You then get frustrated because this is a consistent problem...early exits or late exits.

My point, the problem is not your exit strategy...the problem is you (your lack of discipline). A problem that will not go away regardless to any changes you make in your exit strategy. Thus, best spend your time fixing yourself and leave your strategy as is.

In contrast, if you do have a exit strategy and your strategy tells you to exit at +3 points and you do just that when price reaches +3 points but price then continues to +7 points without you...

There's nothing wrong with your exit strategy and nothing wrong with you. Simply, you had discipline and did exactly what you were suppose to do. Yet, if you're consistently following your exit strategy and you're consistently leaving money on the table...do some basic statistics work to determine how much you're consistently leaving on the table. For example, if your stats say you're consistently leaving another +2 points on the table after you've exited @ +3 points...

You need to re-design your exit strategy or just the knowledge of knowing exactly how much profits you're leaving on the table on average per trade "should" be enough information to encourage you to stay in the trade a little longer. Without the stats work...you can't properly re-design your exit strategy.

However, if this thread is all about a few trades (low percentage) that are problematic...don't worry about those infrequent (low percentage) trade problems because trading will NEVER be perfect.
 
For entries, I think anyone can get in a trade but when do you get out?

It always seemed like I was holding for too long hoping (no stop loss) or out early only if I was long to see the stock go to the moon!

Some people use a %, like 2% profit and 1% loss or 50 cents winner, 25 cent loser, that way I can be 50-50 and be up money. I was curious what some others employed for taking profit. Any indicators or just price action?

Maybe if long, using a candle that made a new low and exit? I dont know!
 
dafishman said:
For entries, I think anyone can get in a trade but when do you get out?
More...
This seems to be your problem right here. No, not anybody can get into a trade, at least not with consistently good results. Entries matter as much as exits. If you have a good entry system, figuring out your exits should be a breeze. If you're flipping a coin for your entries, then you should start flipping for your exits as well.
 
dafishman said:
For entries, I think anyone can get in a trade but when do you get out?

It always seemed like I was holding for too long hoping (no stop loss) or out early only if I was long to see the stock go to the moon!

Some people use a %, like 2% profit and 1% loss or 50 cents winner, 25 cent loser, that way I can be 50-50 and be up money. I was curious what some others employed for taking profit. Any indicators or just price action?

Maybe if long, using a candle that made a new low and exit? I dont know!
More...

Please re-read my prior reply because you're using that "infamous" words called seemed like as if you do not have any statistical information to support your statement. You also used other words like "go to the moon" as if you're only talking about a low percentage of trades that you "wished" you had caught. I say this because if you were seeing most of your trading going to the moon without you on board...

You don't need anonymous folks at a forum nor do you need to be a rocket scientist to determine that the next trades you take...hold them until they reach the status of a price action that has reached a "it went to the moon" price target.

Note: Usually when someone use that type of terminology like it went to the moon...its a phrase that means the trade has at least doubled their money because anything less isn't a trade that went to the moon (seriously).

I'll repeat, if you're only talking about a low percentage of trades that you're having exit problems via seeing trades "go to the moon" after you've exit them...that's normal and you should get over this problem because you will never achieve perfection on every trade...never.

Yet, if you're going to continue to worry about trades that have went to the moon...why don't you just determine a fixed percentage or price that represent your definition of it went to the moon. Next, hold your next group of trades until it reach the status of it went to the moon. Then return back to ET to tell us how your trading went when you held your trades for that "moon exit". I don't say the above to be sarcastic. I say it because you've returned back to trading after being away from it for a long time and you're already developing the wrong mentality about your exit problems. You need to do some statistical work to determine what that "it went to the moon" means for you and then look for a exit strategy that will help you achieve that or you may realize something else...you may be trading the wrong trading instruments to achieve that type of profit potential. Thus, the issue is not your exit strategy...the issue then becomes your selection of what to trade and when to trade it.

Further, I notice you continue not mention anything about your current exit strategy except vague statements like exit early or stay in too long. In addition, you don't give any real examples of real trades you've taken, you don't mention anything about your goals prior to the trade and you don't talk about your entry signals. Simply, you may be barking up the wrong tree because it may have nothing to do with your exits because the problem may be your stock selection or entry signals.

Last of all, welcome back to trading. :)
 
I never take a profit. I only take losses. Eventually, my account gets to where I have enough money, or more than I need, and I get flat.

I've had many many profits turn into losses and get stopped out. But you gotta pay the man somewhere, and that's where I choose to pay him.
 
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